Segment Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company had two reportable segments during the three and six months ended June 30, 2023: Wound & Surgical and Regenerative Medicine.

•Wound & Surgical focuses on the Advanced Wound Care and Surgical Recovery markets through the sale of the Company’s portfolio of products and product development to serve these primary end markets. Its platform technologies include tissue allografts derived from human placental membrane (EPIFIX®, AMNIOFIX®, and AMNIOEFFECT®), tissue allografts derived from human umbilical cord (EPICORD® and AMNIOCORD®), and a particulate extracellular matrix derived from human placental disc (AXIOFILL®). This segment is also responsible for international sales of the Company’s Section 351 products.

•Prior to June 20, 2023, Regenerative Medicine focused solely on Regenerative Medicine technologies, specifically progressing the Company’s placental biologics platform towards registration as an FDA-approved biological drug. mDHACM was the lead product candidate in its late-stage pipeline targeted at achieving FDA approval for an indication to help decrease pain and improve function in patients suffering from Knee Osteoarthritis. On June 20, 2023, the Company announced a plan to disband the Regenerative Medicine business unit and suspended its Knee Osteoarthritis clinical trial program. Regenerative Medicine was not deemed to be abandoned as of June 30, 2023 as the Company has continuing run-off operations pursuant to certain regulatory requirements.

The accounting policies of the segments were the same as the Company’s accounting policies. See Note 2, “Significant Accounting Policies,” included in the 2022 Form 10-K.

The Company evaluated the performance of its segments and allocated resources based on segment contribution, defined as net sales less (i) cost of sales, (ii) selling, general and administrative expense, (iii) research and development expense, (iv) amortization of intangible assets, and (v) restructuring. The only components which comprised income (loss) before income tax provision that were not included in operating income (loss) were interest expense, net and other expense, net.

The Company did not allocate any assets to the reportable segments. No asset information was reported or disclosed to the chief operating decision maker in the financial information for each segment.

Net sales and segment contribution by each reportable segment for the three months ended June 30, 2023 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	80,461	—		$	796	$	81,257
Cost of sales	12,736		—		847		13,583
Selling, general and administrative expense	38,500		—		13,425		51,925
Research and development expense	1,632		6,865		—		8,497
Restructuring	—		3,256		—		3,256
Amortization of intangible assets	—		—		191		191
Segment contribution	$	27,593	$	(10,121)
Investigation, restatement and related expense							1,017
Operating income							$	2,788
Supplemental information
Depreciation expense	$	395	$	72	$	220	$	687
Share-based compensation	$	1,845	$	(193)	$	2,408	$	4,060

Net sales and segment contribution by each reportable segment for the three months ended June 30, 2022 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	66,094	$	—	$	789	$	66,883
Cost of sales	10,838		—		985		11,823
Selling, general and administrative expense	38,681		—		17,112		55,793
Research and development expense	2,408		3,104		—		5,512
Amortization of intangible assets	—		—		173		173
Segment contribution	$	14,167	$	(3,104)
Investigation, restatement and related expense							3,218
Operating loss							$	(9,636)
Supplemental information
Depreciation expense	$	459	$	39	$	360	$	858
Share-based compensation	$	1,896	$	302	$	2,230	$	4,428

Net sales and segment contribution by each reportable segment for the six months ended June 30, 2023 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	151,090	—		$	1,843	$	152,933
Cost of sales	24,068		—		1,934		26,002
Selling, general and administrative expense	76,166		—		28,036		104,202
Research and development expense	3,154		11,839		—		14,993
Restructuring	—		3,256		—		3,256
Amortization of intangible assets	—		—		380		380
Segment contribution	$	47,702	$	(15,095)
Investigation, restatement and related expense							4,690
Operating loss							$	(590)
Supplemental information
Depreciation expense	$	784	$	135	$	482	$	1,401
Share-based compensation	$	3,228	$	259	$	4,918	$	8,405

Net sales and segment contribution by each reportable segment for the six months ended June 30, 2022 were as follows (in thousands):

	Wound & Surgical		Regenerative Medicine		Corporate & Other		Consolidated
Net sales	$	124,423	$	—	$	1,354	$	125,777
Cost of sales	19,967		—		1,792		21,759
Selling, general and administrative expense	72,725		—		32,638		105,363
Research and development expense	4,358		7,118		—		11,476
Amortization of intangible assets	—		—		345		345
Segment contribution	$	27,373	$	(7,118)
Investigation, restatement and related expense							5,770
Operating loss							$	(18,936)
Supplemental information
Depreciation expense	$	914	$	84	$	720	$	1,718
Share-based compensation	$	3,661	$	564	$	4,201	$	8,426